Contractors' fate uncertain even as DoD civilians return from furloughs

Monday - 10/7/2013, 4:30pm EDT

Stan Soloway, president and CEO, Professional Services Council

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Many Defense Department civilian workers are heading back to work today after Defense Secretary Chuck Hagel announced Saturday he would recall most of the Pentagon's 400,000 civilian employees from shutdown-imposed furloughs.

But that announcement, coming nearly a week into the government shutdown, has implications not only for civilian workers but also contractors

Some large defense companies, which had been planning to furlough their employees, have canceled — or at least scaled back — their initial plans.

United Technologies Corp., which makes the military's Black Hawk helicopter, announced it would forego furloughs of 2,000 employees originally planned for this week because of the shutdown.

For its part, Lockheed Martin, which had originally planned to furlough 3,000 of its workers, announced it would pull back the number to 2,400 because of the DoD announcement.

In a message to employees Sunday, BAE Systems CEO Linda Hudson said about 1,000 employees in the company's intelligence and security division have already "excused from work" last week.

"And many other facilities across our business have begun to experience shutdown- related disruptions to workflow, some minor and others less so," she said. "This has left a lot of employees wondering, 'Could my job be affected if the government shutdown continues?'"

How will it impact contractors?

Hagel's announcement was a result of The Pay Our Military Act, which Congress passed and the President signed just hours before fiscal 2013 funding lapsed last week. The bill aimed to ensure that uniformed service members would be paid during a shutdown. However, it also provided for pay to civilians and contractors who "are providing support to members of the armed forces."

After a week of the Pentagon's legal team parsing the bill, DoD determined it could recall most of the 400,000 furloughed federal workers.

Still, it's unclear exactly what impact Hagel's directive to recall civilian workers would have on contractors.

Much of the impact of the shutdown on contractors boils down to the individual contracts they're working on, Dan Stohr, director of communications for the Aerospaces Industries Association, told Federal News Radio.

Either the government has issued a stock-work order because funding for the contract lapsed along with all other congressional appropriations last week or the government facilities where contractors perform their work have been closed because of the shutdown.

Hagel's directive will do little to ease the first of these.

"There will be industry workers that will be furloughed this week but that's a result of the expiration of funding, not anything DoD has any direct influence over," Stohr said.

DCMA employees back on the job

However, the return of more than 10,400 DoD civilians to the Defense Contract Management Agency could lift a large burden off of contractors. Furloughs of DCMA employees responsible for conducting equipment inspections threatened to stop work and create large-scale delays in the procurement process.

"The biggest issue, as I understand it, is not that there's not funding for the work," said Stan Soloway, president and CEO of the Professional Services Council, in an interview on Federal Drive with Tom Temin and Emily Kopp. "It is that because the Defense Contract Management Agency was, essentially, entirely furloughed, they don't have their DCMA quality-assurance personnel on- site — because DMA at the large plants will have a presence full-time — and if they're not there to do the quality-assurance, you can't function."

As the shutdown continues into its second week, companies are looking for ways to maintain some semblance of normalcy for their employees.

BAE's CEO Hudson said her company is taking "extraordinary steps" to minimize the impact on workers, including continuing to pay workers unable to access federal facilities and providing benefits coverage for nonunion employees for as long as 90 days.

"The first and foremost issue, you know, is taking care of the employees," Soloway said. "And a lot of companies have very quickly tried to generate a strategy where they can put some people on personal time off or turn them over to some sort of overhead activities internally while the revenues aren't coming in. But that can only last a very short time."

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